Positioning an ASC for the Future of Reimbursement: Best Practices for Revenue Capture
Ambulatory surgery center (ASC) reimbursements are under attack from increased regulatory pressure and changes to private insurance, forcing ASCs to take a close look at the bottom line. These threats are not expected to go away any time soon, as their lack of a unified front makes physicians and ASCs popular targets for reimbursement reductions.
New efforts by the Ambulatory Surgery Center Association (ASCA) will hopefully begin to turn the tide back in favor of ASCs, since many payers recognize that these groups offer a cost-efficient surgery alternative.i In the meantime, however, Medicare's 2013 final payment rule provides for an deflated increase in ASC payment rates by only 0.6 percent, based on a projected rate of inflation of 1.4 percent. The ASCA expressed disappointment that this payment update is substantially below the 1.3 percent update in the proposed rule, which was based on an inflation rate of 2.2 percent minus a 0.9 percentage point productivity adjustment. According to the rule, hospital outpatient departments (HOPDs) will receive a 1.8 percent increase, based on a 2.6 percent market basket and a 0.8 percentage point productivity reduction, further widening the gap between HOPDs and ASCs.ii
The payment schedule continues a trend of inequitable treatment of ASCs, compared to their HOPD counterparts, according to the ASCA.iii Couple that with the fact that ASC reimbursements will be impacted by their performance on five quality measures under CMS’ ASC Quality Reporting Program, effective with the CY 2014 payment determinations,iv and the need for a strategic pathway to increase revenue, eliminate waste and streamline processes becomes clear.
While these threats paint a discouraging picture, there are some positive notes. CMS and a number of private payers are beginning to pay for more specialty services provided through ASCs, because they recognize the value these entities bring to delivering cost-efficient, high-quality care. These expansions should encourage ASCs, but the centers cannot become complacent about the need to position themselves to compete in tomorrow’s reimbursement landscape.
Simply put, the future’s most competitive and successful ASCs are not waiting to see what happens. They are proactively identifying creative ways to generate new sources of revenue now while decreasing operating and equipment costs. By following the six best practices below for revenue capture, ASCs will be taking the first steps toward a viable and successful future.
1. Add New Procedures to Create New Revenue Streams
One of the easiest ways to generate new revenue is by adding new procedures to the service mix in the most inexpensive ways possible. To do so, ASCs should evaluate existing equipment and capabilities and add services that complement their existing resources.
For example, if an ASC has a C-arm for pain management procedures, the center’s caseload could be expanded to include spine procedures, which continue to be reimbursed at an attractive rate. In fact, C-arm usage has recently expanded to include minimally invasive orthopedic surgeries, as well as cardiac, urology, vascular and neurovascular applications.
If a center is already providing urology services, it could maximize its resource use by including brachytherapy for prostate cancer patients. ASCs will need to keep in mind that this type of procedure requires a license for nuclear materials storage, such as the radioactive seeds.
Other considerations for expanding revenue sources could include adding pulmonary, cardiovascular or gastroenterology (GI) procedures. Adjustable gastric banding surgery programs have proven profitable additions, albeit more complex because they require a fully implemented program and a surgeon willing to chair the program, as opposed to just providing surgical services.
The best idea is to compare CMS’ expanded list of specialty procedures with existing resources to identify potential opportunities.
2. Maximize Real Estate
When considering ways to generate new revenue streams, many ASCs need look no further than the real estate they already own. CMS requires that surgery centers establish standard hours during which they operate as a licensed ASC. However, outside of those timeframes, buildings can be rented out or used for other purposes.
For example, many ASCs don’t have the case mix to support Monday through Friday operating hours, or they may only offer part-time hours, such as 8 a.m. to 2 p.m. Outside those hours, the center could be used for such purposes as an infusion clinic or a sleep center, or even rented to local businesses or civic groups for meetings and lectures.
While individual state regulations will dictate how a building can be utilized, some states will allow an ASC to be rented to another group for use as a separate surgery center under a different license. In these instances, owners could consider renting the facility with existing staff as long as a lease agreement is in place for the employees.
3. Cut Equipment and Supply Costs
Reducing the money spent on equipment and supplies is an obvious way to recapture revenue. One of the most effective and efficient ways to decrease these budget line items is by joining a group purchasing organization (GPO).
GPOs create negotiating power with vendors for better rates through a group approach that increases the potential for sales. This typically includes medical and office supplies and has generated savings as high as 30% in some cases.
Another way to address equipment costs is to agree on one brand. Not only does this increase negotiating power with that brand, but it also creates standardization within the ASC.
Finally, ASCs should track repair costs. When the amount spent inches close to the original purchase or lease price, or the equipment is out for repairs too often, it’s probably time to make a new investment to save costs in the long run.
4. Create Cost-Efficient Staffing Models
The first rule of thumb when trying to minimize staffing costs is to hire as many part-time professionals as possible. This way, staff is only used when the center needs them. It can also be a valuable recruitment tool, as many experienced nursing professionals are seeking flexible hours. Part-time employment can be an appealing option.
Staffing needs can also be reduced by compressing the schedule for procedure rooms to best accommodate the average case load. If cases are consolidated to a couple of days each week, gaps can be eliminated in the schedule and staffing reduced to the number of active procedure rooms.
Cross-training staff can also reduce the number of staff needed overall. For example, if nurses are trained to do both pre-op and post-op tasks, then at least one professional can be eliminated from the staffing mix immediately.
5. Increase Exposure and Referrals
Sometimes investing in non-clinical staff can be a move in the right direction. A part-time marketing representative who knows the business and who can interact well with referral sources can bring significant returnon investment, especially if they have prior experience calling on physicians.
When a representative keeps in close contact with physician offices, ASCs can see a notable spike in surgical volumes - as much as 30%.
6. Use the Right Technology
Electronic health record (EHR) technology is a crucial component of any strategy designed to position ASCs for the future of healthcare. EHRs designed specifically for ASC workflows have a proven track record of increasing throughput, reducing duplicated efforts, eliminating costs associated with paper processes and eliminating the cost of transcription services. One GI center that operated as part of a 286-bed hospital system was able to eliminate paper costs equating to more than $7,400 and transcription costs of $39,000 annually.v
Another consideration is electronic procedure documentation software. This software allows physicians to efficiently and accurately document procedures at the point of care, producing complete, coding-ready and image-enhanced documentation.
When considering which technology to deploy, it is important to analyze whether a particular solution can address the specific workflow needs unique to the ASC environment. Technology created for hospitals will have limitations in this regard, potentially leading to difficult deployments and clinician pushback.
ASCs may not face the same regulatory pressures—or incentives—to deploy EHR technology as their hospital and physician counterparts, but the need for streamlined workflows that improve quality of care will necessitate a move in this direction.
The impact of health reform is continuing to make waves across the industry, and ASCs are not immune to the effects. Against a backdrop of rising costs, decreasing reimbursements and regulatory scrutiny, ASCs will need to take a creative and thoughtful approach to revenue and operational practices to survive.
While ASCs play an important role in the healthcare industry as a cost-efficient, high-quality surgical alternative, the reality is that if proactive action is not taken to become “lean and mean” operationally, many centers will not survive. The six best practices provided in this white paper are an excellent starting point for arming ASCs with a strategic road map to success.
ProVation® Medical acknowledges the invaluable contributions made by Linda Petersen, a nationally recognized expert on ASC management and finances, to this paper. Petersen is CEO of Executive Solutions for Healthcare LLC, which designs, develops and manages surgery centers and related healthcare facilities. She can be reached at firstname.lastname@example.org.
i Miller, L. (2012, May 11). Standing up for the ASC industry: Q&A with ASCA chief executive officer William Prentice. Becker’s ASC Review. Retrieved from http://www.beckersasc.com/news-analysis/standing-up-for-the-asc-industry-qaa-with-asca-chief-executive-officer-william-prentice.html.
ii Ambulatory Surgery Center Association. 2013 Final Payment Rule. Retrieved from http://www.ascassociation.org/FederalRegulations/Medicare
iii Ambulatory Surgery Center Association. (2012, November 2). Analysis of Medicare’s 2013 Payment Rule. Retrieved from http://www.ascassociation.org/asca/aboutus/latestnews/november2012/analysisofmedicares2013paymentrule
iv Ambulatory Surgery Center Association. Quality reporting FAQs. Retrieved from http://www.ascassociation.org/ASCA/FederalRegulations/Medicare/QualityReporting/QualityReportingFAQs/.
v ProVation Medical. St. Vincent healthcare benefits: From an "EHR within an EHR" [PDF]. Retrieved from http://www.provationmedical.com/common/pdf/StVcase-1011-FIntPrint-11-3.pdf